2016 Chinese Seed Market Watch

Author: Li Tongchao, Strategic Planning Dept., China National Seed Group

2016 was the first year when the new seed law came into effect. During that year, an increase in the corn seed production area, cancelation of temporary purchasing and storage of corn and the reduction of corn planting area altogether has resulted in a continued downturn in the seed industry.

However, several policies and regulations issued in support of the seed industry, a broadened market access and the government’s interpretation of GMO development are seen as positive for the seed industry. Let us look back and recap the year 2016, which had both opportunities and challenges.


On January 1, 2016, the amended Seed Law of the People’s Republic of China came into effect, followed by three additional administrative measures implemented at a later date. The Administrative Measures for Major Crops Variety Registration included a green channel examination and approval approach, where the scope of examination and approval for major crops was reduced and the system of forced withdrawal of varieties was formulated; the Administrative Measures for Crop Seed Production and Operation Licensing, under which two licenses were consolidated as one, specified the responsibility of the business main body; the Administrative Measures for Seed Labeling and Use Instructions made clear the scope and content of labeling and use instructions. The amendments also reflected the intentions of the seed law to encouraged innovation, simplifying administrative measures and effected strict controls while allowing for a certain degree of flexibility.

In the meantime, the Chinese Minister of Agriculture, together with the local administration in charge, took measures to crack down illegal acts in major locations and among major vendors, such as unauthorized business operations, release of product without prior approval, infringement by using fake product, and producing and selling counterfeit or inferior product.

The series of policies and actions against counterfeits made clear the responsibility of the business main body, strengthened law enforcement measures, regulated production and promotion means and enhanced the intensity of punishment for illegal acts. These policies enabled the establishment of an open and fair business environment.


In 2016, the phrase “agricultural supply-side structural reform” was brought into the No.1 Document of the Central Government for the first time. On the agricultural supply side of structural reform, structural adjustment is a key element and a difficult issue.

In April, the Chinese Ministry of Agriculture issued the National Structure Adjustment Plan for Crop Farming (2016-2020), which specified that this round of structural adjustments would focus on the establishment of the “grain, cash crop, forage crop” ternary structure.

This ternary structure not only serves to ensure the production of grain, cereal, cotton, oil, sugar and vegetable, but has added for the first time the forage into the crop production structure for consideration as a whole. The objective is to speed up the establishment of a modern agricultural structure, based upon the coordination of grain, crop and forage, combination of farming and animal husbandry, integration of planting, breeding and processing, incorporation of the first, second and third industries.

In the Liandaowan region (China’s corn planting areas mostly in North China), the corn planting area is being reduced, while planting of soybean, which is in short supply, will be increased. In this regard, subsidy is being provided to support the planting-breeding combination oriented “grain switching to forage” initiative and the crop rotation/fallowing oriented “grain switching to soybean” initiative.

To this end, a rare development opportunity has been provided for those seed enterprises focusing on silage corn and soybean, despite the downturn occurring in some of the corn seed companies.

This round of planting structural adjustment is not only a structural adjustment for the better, but requires more effort being put into the improvement of quality and efficiency. With Chinese agriculture being transformed and upgraded at present, demand for renovated, featured and simplified varieties is growing day by day. In government papers, such as the China Agricultural Modernization Plan (2016-2020), the concept of a “new round of variety upgrading” has been mentioned repeatedly. The differentiated development of seed enterprises and the ecological development of the seed industry have become more and more important with each passing day.


With the implementation of the Notification on Further Modification of Variety Trial Examination and Approval as issued by Chinese Ministry of Agriculture, a large number of major crop variety trial-targeted consortium emerged; also the variety green channel examination and approval system and the reporting system for variety introduced into a similar ecological region were put in place. These measures enabled crop varieties a broadened market access channel.

A major crop variety trial-targeted consortium was established between seed enterprises and research institutions to conduct a variety trial in accordance with the examination and approval procedure. This is a positive approach to the variety trial utilizing social resources to broaden trial channels, which also helps to make up for the insufficiency of national examination and approval capacity. The approach in this way is of benefit to the seed breeding innovation of seed enterprises and of research institutions, enabling them to launch more superior varieties, which are of high yield, good quality, wide-range adaptability and easy plantation.

Since the green channel system was implemented substantially, the first batch of rice and corn varieties was approved via the system in 2016. More varieties are expected to be released to the market via the system at a later time. Seed breeding, production and marketing integrated enterprises will be able to make full use of the green channel system to enhance their innovation capacity and competitive edge.

It should be noted that a blowout of varieties will be testing the market operation capability of seed enterprises, and will in return force varieties to be upgraded. The differentiated development of seed enterprises has gradually appeared.


Further to the 2016, the No.1 Document of the Central Government, emphasized the prudent promotion of GMO on the basis of safety assurance, while GMO development and oversight of GMO development needed to be strengthened. In the National Scientific and Technological Innovation Program under the 13th Five-Year Plan issued in August, the subject of “GMO variety breeding” was listed as a key state science and technology project, with request that “China’s GMO research level in general needs to leap to the forefront of the world, so as to provide variety and technical reserves for the assurance of the national food security.”

The GMO roadmap was elaborated for the first time at a press conference in April held by Chinese Ministry of Agriculture. The responsible person at the Ministry expressed that: firstly the promotion of industrialization of GM crop production should be based on safety assessment and management, which are conducted in strict compliance with the law and regulations to obtain production application oriented safety certificates; secondly the road map for non-edible crops, indirectly edible crops and edible crop needs should be followed, which means GMO development shall follow this sequence: non-food crop, forage crop, crop for processing, ordinary food crop and major food; thirdly demand from industry needs to be considered and stress should be laid on solving the bottleneck problems, which are restraining China’s agricultural development, such as the issues of disease resistance, insect resistance, water saving and drought resistance, high yield and high quality.

While the GMO roadmap is being determined, the Chinese Ministry of Agriculture has strengthened GMO safety supervision. On the one hand, the examination of law enforcement was conducted to investigate and punish illegal planting of GM crops. On the other hand, a number of GMO national standards for safety management were formulated. The Administrative Measures for Safety Assessment of Agricultural Genetically Modified Organisms were amended, and the process of designation for the first batch of GMO experimental bases was initiated.


2016 saw accelerated cooperation between the seed industry and the capital market. At the macro level, the government positively promoted integration between the seed industry and the capital market. In May, the Chinese Ministry of Agriculture held the Capital Driven Seed Industry Upgrade Workshop, aiming to introduce financial, industrial and capital funds into the seed industry in a smooth and efficient way, so as to speed up the transformation and upgrading of the seed industry. Soon afterwards, six Chinese ministerial authorities, including the People’s Bank of China and the Ministry of Agriculture issued the Modern Seed Industry-Oriented Financial Service Guidelines, which encouraged angel investment and risk investment into the seed industry, as well as provided supportive measures for eligible seed enterprises to seek financing in the stock market.

From an industry perspective, the outcome of the support from the capital market to the seed industry has become evident. Up until end 2016, public-listed Chinese domestic enterprises increased up to 52, including 10 seed enterprises in stock market and 42 in NEEQ. In 2016, 19 seed enterprises went listed on NEEQ.

With the help of the capital market, mergers and acquisitions between seed enterprises have obviously speeded up. In the Chinese market, Yuan Long Ping High-Tech Agriculture Ltd. acquired a 51 percent stakes in Guangxi Heng Mao Agricultural Technology Ltd., and established a joint venture with Heilongjiang Guang Yuan Seed Group Ltd., being regarded as further regional business deployment.

In the international market, COFCO completed the acquisition of Nidera, which is a precedent for Chinese enterprises to acquire international prime seed companies. Chem China’s bid of $43 billion for acquisition of Syngenta hit a record high in the history of overseas acquisition by Chinese enterprises, which may change the business distribution pattern of the world seed industry.

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